Bad Condo Board?

cherylneenayOctober 21, 2005

So I just moved into a new condo a couple months ago. Silly us, we failed to talk to the neighbors and now that we've met them, we're discovering a whole lot of hostility between them and the board. Our neighbors think the board has been screwing around and embezzling money for the past 5 years (yes, they've tried to vote them out of office!). Other neighbors we met at the first (and so far only) meeting are just fine with things the way they are and refer to the others as something along the lines of the "Rebellion."

It seems to me that for their to be such serious allegations flying around that there must be something fishy going on. One neighbor is interested in hiring a lawyer, but says if that's done then the entire condo gets shut down and we'll all be paying mortgages on condos we can't live in (we live in Chicago).

So two questions:

One, what can be done aside from hiring an attorney?

Two, if it actually went to court, would we really not be able to live in our condos?


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One neighbor is interested in hiring a lawyer, but says if that's done then the entire condo gets shut down

This is just flat-out wrong. Almost nothing "shuts a condo down" short of it being physically unsafe to live in.

Oh, perhaps if the condo defaulted on its underlying mortgage, or cheated on filing payroll taxes--but even then, there's usually a financial way to salvage the situation. It could cost the condo owners some dough, perhaps.

Even if the board members are crooks, the organization (which is the SHAREHOLDERS or owners) will still exist long after they've gone to jail.

What WILL happen is that the condo owners will pay the cost of lawyers to defend the board members and the organization. So if you're a party to the lawsuit, you'll pay for both sides.

I live in a co-op, not a condo, and I know there are some ownership differences. For example, I don't actually own my apartment; I own the right to live in my apt. But in a condo, you own the apartment. It would be really hard to keep you from living in it.

It seems to me that for their to be such serious allegations flying around that there must be something fishy going on.

Not necessarily. How many neighbors are these, in the "Rebellion"? If it's 1 ot 2 families, it may just be a couple of unreasonable people who like toa ccuse people of the most heinous thing they can think of, just because they're not getting their way.

If it's 5 or 6 families, then yes *something* is going on, even if it's not fishy.

Perhaps the board has spent money in a way the "Rebellion" doesn't approve of. Perhaps the board has made errors in judgment that cost the condo money (malfeasance but not criminal). Perhaps the complainers don't have an accurate picture of exactly how much $ it costs to administer the condo.

What you should do, right away, is attend board meetings religiously. Carefully review the by-laws and regulations, and start observing how carefully the board follows those rules (holding open meetings, revealing financial information, getting competing bids, etc.)

Also, look carefully at the financials, esp. the expenses. Do they seem like reasonable things to spend money on, to you? Do they seem like a reasonable amount of money?

If they don't, do some research to see what things really cost. Insurance & taxes are going up in a skyrocketing manner; you could easily thing something was a ton of money to spend, and find out that actually the condo got as good a deal as it was gonna get.

It's only been a couple of months. Start gathering info.

Your OWN info, so you can make your OWN decisions.

Also scrutinize the people who are telling you what they think. Do they seem like sensible people? (for example, the guy w/ the comment you reported is not particularly reliable) Is there anything in their background that would make them a good judge of the situation? (for example, one guy in my bldg was a CFO, so when he talks about money, I believe him)

Are the "rebellion" folks all new? all long-term residents? My co-op had a "rebellion" of sorts--the old guard was really pissy and controlling; newer members got fed up and approached one of their member to see if she'd be willing to serve as the board president. The newer folks had a majority vote, and the turned the officership completely over--all new people in every office.

The old guard was really upset--they felt they'd been ganged up on (they had), cheated, etc. They were obstinant and made life difficult for the new officers for several years. They were a minority, so they couldn't force anything to happen or not happen (and in fact, the new officers did everything they could to run the co-op well). But they could be unpleasant, and many of them were for a while. I wouldn't have put it past those folks to accuse the new officers of outright theft.

If you think something fishy is going on, there may be non-lawyer options. There's the "vote them out of office" tack--you seem shocked by those previous attempt, but actually that is all right and proper. If your research makes you decide the board is not acting properly, you have every right (some might say a responsibility) to share your research w/ other owners in an attempt to influence the vote (be prepared to find someone, maybe even yourself, to take over the job--it's a lot of work!).

Sometimes there are state agencies that govern condos and co-ops (I know NYState has an agency you can turn to for some co-op stuff like this); once you feel you trust your info, you might be able to get some help from them--mostly in the form of telling you how to investigate, etc., but sometimes in the form of filing charges.

Since the condo is an organization, tort law may cover lots of stuff in it, but if the board truly is stealing money, that might fall under criminal law--and if you can gather evidence that's court-ready (or nearly so), you could possibly get your district attorney interested.

But first, you need to gather the info for you own self.

What *is* bad is the division. That's a bummer to live among, emotionally, and it doesn't usually make for good condo management. Too much energy wasted on fighting and defense; it distracts people from doing their best to manage the condo.

Good luck!

    Bookmark   October 21, 2005 at 2:00PM
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Very well said, Sue. You've covered everything.

I would tread with caution about this. My red flag is up; I could be wrong but any neighbor, who acts like this upon first meeting, would make me very wary. As Sue mentioned, you don't know if this people have some sort of "issue" with the Board. Maybe they violated some sort of rule.

In any event, do your homework and come to your own conclusions.

    Bookmark   October 22, 2005 at 9:09AM
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